No Complete Deficiency Of Service: Supreme Court Directs Release Of 50% Of Compensation Amount To Farmers Alleging Substandard Quality Of Seeds

A producer and distributor of groundnut seeds, namely, M/s. Shyam Beej Bhandar and Shree Ram Agro Bio-Tech (appellants) approached the Apex Court assailing the order passed by the National Consumer Disputes Redressal Commission, New Delhi (NCDRC) in a Revision Petition.

The Division Bench of Justice B.V. Nagarathna and Justice Ujjal Bhuyan held, “We find that the Report also takes into consideration the fact that there was excess rainfall during the relevant period and as a result there was a very good arboreal growth of the species but nevertheless the pods were semi-developed and only 50% of the pods were found completely developed. From this, we infer that there was no complete deficiency of service as has been observed by the District Forum as well as by the NCDRC. However, the fact also remains that there was semi-development of the reaming pods which is also highlighted in the Report.”

Advocate Vikas Upadhyay represented the Appellant, while AOR Varun Mishra represented the Respondent.

Factual Background

The respondent farmers approached the appellant for the purchase of groundnut seeds. Around four months later, a complaint was filed by the respondents-farmers before the Deputy Director (Agriculture), District Council, Alwar, alleging substandard quality of the seeds leading to the failure of the crop. Accordingly, a committee was constituted to investigate the failure of the crop. The committee submitted its inspection report, and the respondent farmers filed complaints under Section 12 of the Consumer Protection Act, 1986, before the District Forum.

The District Forum allowed the complaints and directed the appellants to make payment of different amounts to the respondents-farmers along with compensation of Rs 20,000 and cost of the suit at Rs 5,000 each. Aggrieved, the appellant preferred an appeal before the State Commission. The State Commission set aside the order of the District Commission. In turn, the respondents-farmers moved the NCDRC by filing a Revision Petition. The NCDRC set aside the order of the State Commission and restored the order of the District Forum.

Reasoning

Referring to the Investigation/Inspection Report, the Bench noted that the inspection was made in October 2013, and the sowing of the groundnut seeds was sometime in June and even after 120 days; on inspection, it was found that the seeds had not matured. The aforesaid finding was a categorical finding which was made by the Inspectors/Scientists and experts.

The Bench found that due to semi-development in the pods of the said species, the market price of the crops would be affected, and the farmers would not receive a fair price for the same. It was stated in the report that 50% of the pods were completely developed, leading to the conclusion that the remaining 50% of the pods were not completely developed.

As per the Bench, the District Forum as well as the NCDRC were not right in assessing the compensation per bigha. The Report also took note of the fact that there was excess rain and, owing thereto, insofar as TAG37A quality of seeds is concerned, there could be a 40-50% shortfall in yield. The Bench found that the Report also took into consideration the fact that there was excess rainfall during the relevant period, and as a result, there was a very good arboreal growth of the species, but nevertheless, the pods were semi-developed and only 50% of the pods were found completely developed.

“From this, we infer that there was no complete deficiency of service as has been observed by the District Forum as well as by the NCDRC. However, the fact also remains that there was semi-development of the reaming pods which is also highlighted in the Report”, it added.

Thus, the Bench set aside the findings of the District Forum, which were sustained by the NCDRC with regard to the aspect of deficiency of service found against the appellants. The Bench thus directed release of 50% of the compensation amount, which has been deposited by the appellants before the District Forum pursuant to the interim order passed by the Court and complied with by the appellants, to the respondents-farmers along with accrued interest, if any. “The remaining 50% of the compensation deposited along with accrued interest, if any, shall be refunded to the appellants”, it concluded while allowing the appeals in part.

Cause Title: M/s Shyam Beej Bhandar & Anr. v. Suresh (Neutral Citation: 2026 INSC 158)

Appearance

Appellant: Advocates Vikas Upadhyay, Abhindra Maheshwari, AOR Tulika Mukherjee, Beenu Sharma, Venkat Narayan

Respondent: AOR Varun Mishra, Advocates Ankur Jain, Anirudha Singh Rajavat, Sanchit Jain, Prablin Singh Abrol, Prashant Kumar Saxena, Ajit Kumar Singh

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